COUPONS

National Coupon Month Spurs Awareness for CPG Marketers

CIC Proposes Adding a Hologram
To Deter Growing Counterfeiting

Don't Make These Mistakes When Targeting Hispanics

Weight Watchers Cereal Gains Sales with Online Coupons



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   BUILDING BRANDS THROUGH RETAIL

National Coupon Month Spurs
Awareness for CPG Marketers

National Coupon Month in September aims to educate consumers about coupons. At the same time, CPG marketers and retailers will benefit from increased awareness of the promotion industry’s most used tactic.

“National Coupon Month is a celebration of coupons,” said
Claire Rosenzweig, CAE, president of the Promotion Marketing Association (PMA), the trade group that developed the promotion. “It’s the time of the year to celebrate the power of coupons as part
of the promotional mix and within an integrated marketing communications plan.”

Consumers can find information about coupons at the National Coupon Month Web site, www.couponmonth.com. There are tips ranging from making coupon-clipping a great math and savings lesson for the kids to using coupons with shorter expiration dates first to stock up on necessary items. The site is a year-round resource for those looking to maximize their savings and shop smart with coupons.

Rosenzweig said heightened consumer awareness of coupons eventually results in increased usage, which benefits manufacturers and retailers. 

“We want marketers to understand the best way to utilize coupons,” she said. Through the PMA Coupon Council, “we try to help marketers understand the role of coupons in the overall integrated marketing mix and how they can be used as part of an integrated marketing plan to help build the brand.”

Meanwhile, PMA’s new Retail Council is ramping up its activity as well. “We’re trying to help retailers understand how promotion as a whole can be used to drive traffic to the store. And certainly coupons are a critical element to that,” she said.

Rosenzweig encouraged CPG manufacturers to enhance their involvement with coupons by joining the PMA Coupon Council. “We welcome these companies as members of the PMA so they can tap into our resources. We encourage them to link to the National Coupon Month website – there’s a logo for it – and to literally get on the bandwagon.”

Through the Coupon Council, PMA gathers statistics about the coupon industry. Here are some of them:
  • Three of four (76%) of U.S. consumers use coupons.
  • Shoppers save nearly $3 billion annually by using coupons.
  • CPG manufactures offered more than $300 billion in coupon savings in 2004.
  • Coupon users report an average of 11.5% savings on their grocery bill with coupons.
  • Nearly half of retailers (46%) reported offering shoppers some form of a bonus coupon program in 2004.


CIC Proposes Adding a Hologram
To Deter Growing Counterfeiting

The Coupon Information Corporation (CIC) is urging CPG manufacturers to add a special hologram to their Free Product and high-value coupons to deter counterfeiting. The proposed implementation date for this Voluntary Best Practice developed by the CIC is Sept. 1, 2006.  

“Counterfeit coupons have cost manufacturers millions of dollars and have created numerous costs and challenges for retailers. It is hoped that this Best Practice will provide a reasonable, cost-effective solution for the entire industry,” said Bud Miller,
executive director, CIC, Alexandria, Va. 

The anti-counterfeiting device is a hologram designed to enhance the standard “Manufacturer’s Coupon and Expiration Date” wording on a coupon. The words are legible when viewed directly. When the coupon is titled slightly and viewed, a bright diffractive security image (the CIC logo) covers up the words “Manufacturer’s Coupon” and the actual expiration date. 

In the “Terms and Conditions” listed on the coupon, CIC recommends adding a statement that the coupon is valid only if it has a hologram on it. Two suggestions: “Void Without Hologram” and “Security Feature: Hologram.”

CIC is making the artwork of the hologram available free of charge to all product manufacturers, whether they are CIC members or not. To receive an electronic image of the CIC logo for use as an anti-counterfeiting device, contact CIC at (703) 684-5307.

“A company has just done a prototype that we passed on to our members,” he said. “Several manufacturers are aggressively working to implement it. Our recommendation is that they should start hitting the market in September.

“There will be some transition time,” he continued. “We hope it becomes a universal practice over the next year. Obviously, we have no magic wand to make that happen. We have letters out to about 250 manufacturers. It is a voluntary practice, but the more companies that use it, the more secure it will be. This is the first time we are doing anything like this. But the counterfeiting problem is growing and it needs to be stopped in a systemic way.”

The Voluntary Best Practice has been endorsed by the Association of Coupon Professionals (ACP) and praised by industry experts. “It is a way to allow for high value coupons to be distributed and decrease the possibility of counterfeiting. It will require a strong industry push to get the word out to manufacturers, retailers and consumers to make this practice work. But it allows the industry to continue to provide incentives directly to consumers to use products,” said John Irwin, president of ACP.

Charles Brown, vice president of marketing for NCH Marketing Services, said the CIC should be commended for taking a leadership approach in developing the best practice hologram. “We’ll suggest it to any clients who choose to issue free coupons in appropriate media,” he said. “In reality, with all the formats of coupons in circulation, a hologram on what is hoped to be most free coupons still won’t be fool-proof for cashiers, but hopefully it is a deterrent against counterfeiters even attempting to pass a bogus free coupon.

“There is no panacea solution,” he added, “but continued diligence with coupon design best practices such as the CIC’s hologram recommendation, increased investment in fraud detection and prosecution, and greater consumer awareness will go a long way to enhance the deterrence effect needed for a healthy industry.”

According to Miller, counterfeit coupons over the years have ranged from amateurish home-made versions to high-quality, professional ones virtually identical to those issued by manufacturers.

“Unfortunately, even the amateurish coupons are often accepted for redemption, creating liabilities for a variety of industry participants,” he said. “Once a counterfeit is accepted, someone -- whether it is a manufacturer or a retailer -- is going to have to pay for it, creating uncontrollable liabilities and unnecessary trade relations issues.”

Counterfeiters have forced retailers to be more aggressive in reviewing coupons at the check out lane, according to Miller. The increase in front-end security procedures has created consumer discomfort, increased costs, and lengthened lines.

“There are a number of anti-counterfeiting techniques available to the industry,” he said.   “The effectiveness of these techniques varies. However, the number of potential solutions means that cashiers are seldom trained in all of the available loss prevention techniques. 
Any anti-counterfeiting solution should increase overall cashier efficiency and reduce consumer challenges by being instantly recognizable.”

Miller said some manufacturers have recently begun using foil technologies to print entire coupons. Since these can reasonably be considered to be counterfeit resistant, a hologram is not necessary for these types of coupons.


JULY 2006

Don’t Make These Mistakes
When Targeting Hispanics

By Jack Grant

The growth of the Hispanic population in the U.S. should present an enormous opportunity for coupons. But Hispanics redeem coupons at a lower rate than “mainstream” consumers. Why?

Studies at Wake Forest University suggest several mistakes that marketers are making today. For example, many of their coupon offers simply do not impress Hispanic consumers, and the media in which they are placed often do not reach them. Also, Hispanic experiences in stores may further inhibit coupon use.

Anne Brumbaugh, assistant professor of marketing at Wake Forest University, addressed these issues in a presentation at the annual Industry Coupon Conference in Washington, D.C. in March. The event was sponsored by the Association of Coupon Professionals (www.couponpros.com). She presented the results of three studies exploring coupon use among this ethnic group.

Her first study combined media demographics with coupon redemption data. One key result was that marketers often promote the wrong products to Hispanics. Redemption rates are higher, for example, when a refrigerated food is promoted.

“Refrigerated foods came out big because it is a category that Hispanics use,” said Brumbaugh in an interview after her presentation. “Some of the other categories – paper goods, things like that – may or may not be used in the same quantities, therefore Hispanics don’t need coupons for them.”

Also, the study suggested that estimates of redemption rates are higher when the offer doesn’t have a multiple purchase requirement and the discount is at least 56 cents. Most importantly, marketers often set the wrong expiration date on their coupons.  

“Having a quick turn around on the expiration date does not seem to cause Hispanics to buy things sooner and stockpile them,” said Brumbaugh. “If they are lower affluence folks, they’re going to have smaller houses and they’re not going to have any space to stockpile.  You can have a quick turn around on expiration date all day, but if I don’t have space, I’m not going to buy a gross of toilet paper.”

The second study compared redemption rates for three different samples of coupon offers. The key results were that estimates of redemption rates are higher when:
                                            
  • The products were refrigerated foods, personal care and household items.
  • There was no requirement for multiple purchases.
  • The offer length was 15-22 weeks.
  • The face value was $0.51-$0.99.
  • Coupons were distributed in person such as in-store or at events.

The third study consisted of focus groups that aimed to gain insights into the barriers to coupon use from the consumers themselves. The take-away was that Hispanics are simply not as familiar with coupons as mainstream consumers. There are language and discrimination problems in the store, and the small stores that Hispanics frequent may not accept coupons. Finally, the offers are often “not right” in terms of face value or the product being promoted. 
“These results say that to induce couponing with a Hispanic customer, you have to have a relationship,” said Brumbaugh. “One way of doing that is to distribute a coupon in-person so that there’s
a human -- preferably a Spanish-speaking Hispanic human -- giving
it out.”

One ideal scenario, she added, was to distribute a coupon at an in-store sampling event. “You have a human, a sample of the product, and the coupon all there. You’ve got that relationship prior to asking them to redeem the coupon.”

Weight Watchers Cereal Gains
Sales with Online Coupons

Online coupons have propelled the launch and initial success of Weight Watchers cereal. The brand, marketed by Organic Milling, has gained brand exposure and sales, and is poised for more gains in the marketplace.  

The campaign this year includes doubling the number of online coupons that are refreshed quarterly. The marketer will begin tapping a growing email database of users with loyalty marketing programs, tracking printers and redeemers, and issuing new product alerts. 

The program was outlined by Geoff Wilson, director of marketing for Organic Milling, and Jeff Weitzman, president of Coupons, Inc., a coupon marketing and technology services provider, at the Annual Industry Coupon Conference in Washington, D.C. The event was sponsored by the Association of Coupon Professionals (www.couponpros.com).

The online campaign through Coupons, Inc. includes leveraging the Digital FSI network consisting of thousands of consumer web sites, the Concordance for Brands registration option for building a database, the CouponBar toolbar that, when installed into Web browsers, provides a regularly updated list of offers available on the Internet. Organic Milling used placement in the CouponBar for distribution, not as a feature of its website.

The speakers provided these metrics since the cereal debuted in Nov. 2004:

  • Online coupon redemption rates have been 7-12%.
  • Concordance click-through rates have been up to 4.5%.
  • Database-building is on track to double the original database by the end of 2006.
  • Coupon tracking shows that online offers are more efficient in creating sales than print.
  
When the cereal was introduced, Organic Milling sought to secure shelf space in stores for all five SKUs and begin to build sales. But the launch was hindered because retailers were reluctant to add SKUs to the planogram, and category exclusivities blocked access to FSIs.

“The challenge was to get retailers to take all five SKUs, and getting FSI support was going to be difficult,” recalled Weitzman. “But the breadth and nature of the online program was a key selling point in getting retailers on board with all five SKUs.”

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